Accounting for In-kind Gifts

It’s not surprising that some nonprofits exaggerate the value of in-kind donations in order to make themselves look bigger and better than they really are. There is a lot of pressure, especially at large organizations, to increase financial efficiency ratios because that’s part of the criteria that sophisticated donors use when evaluating a charity.

But in my experience, small nonprofits tend to do the opposite—they are more likely to undervalue their in-kind donations—or worse, they don’t account for some of them at all (I’ve been guilty of this myself). Between donated goods and volunteer time, many small nonprofits are actually bigger and more efficient than their financial documents would lead you to believe.